When Does Separate Property Become Marital Property

Separate property consists of assets accumulated prior to marriage, received as a gift during the marriage, from an inheritance or compensation for personal injury whether received before or during the marriage and kept separate throughout the marriage. Assets acquired after a divorce summons is filed are also separate property.

The problem is that while this may seem simple it is far more complicated because due to ordinary living and sharing during a marriage the lines can become fuzzy and the courts have created numerous exceptions where even separate property may, in part, become marital property due to the contributions of the other spouse whether economic or not.

Assets that are kept separate and grow in value solely due to time passage and appreciation will usually remain separate. Assets that are actively managed by a spouse may cause some of the appreciation to become marital property. For example, if the person with the asset spends hours every day managing and manipulating the asset as if it were a job the asset will be viewed as having grown in value due to "active" rather than "passive" appreciation.

A house owned before marriage and never transferred into joint name will remain separate but there may still be issues regarding a change in value if it was caused by structural or capital improvements to the home or financial contribution by the non-owner. A house that is put in both names but previously owned by one spouse will usually give the original owner a separate property credit for the equity (value minus mortgage) at the time when the second name was added to the deed.

Bank accounts that were separate and then put into both names are not treated the same as the house. Does the rule make sense, not in my opinion. New York law states that the entire bank account becomes marital property because either person could withdraw the entire account. Unless you can prove that the transfer into joint name was for "convenience purposes", the original owner might not get a credit for the initial contribution.

This area of divorce law is very complex and questions are best answered by an experienced divorce attorney. If you have concerns regarding your assets and what will happen in a divorce, please call my office to schedule a free consultation so that you may be guided properly.